Wall Street analysts have come out with new research reports on Apple this week. Last time, experts chose different topics of conversation that ranged from the Apple Car to the 5G super cycle – while all of them maintained their overall bullish ratings on the stock.
Today, the Apple Maven reviews some of the most recent and relevant takes from three prolific sell-side analysts.
Apple store traffic on the rise
Deustche Bank has offered perhaps the most data-heavy report of them all. The analyst began by sharing geolocation data analysis suggesting that Apple store traffic in the US has been increasing. Keep in mind that all retail locations in the country were recently reopened.
According to the German bank, store traffic reached a trough in the spring of 2020. This is consistent with the resurgence in COVID-19 cases that followed the first couple of warm-season holidays. But now, traffic has approached half of pre-pandemic levels – not great, but a move in the right direction.
Deutsche Bank also shared some data on iPhone demand, gathered from the firm’s surveys. The analyst was unimpressed with consumers’ willingness to upgrade their devices in 2020: 57% of the total vs. 59% in December 2019. But he also reinforced that demand should improve, as 5G networks expand globally.
Lastly, only about one-third of people surveyed seemed interested in an Apple Car – one of the key drivers (pun intended) of investor enthusiasm in the past few months. Still, Deutsche Bank remains bullish on Apple, believing that there is a 30% upside opportunity here.
Focus on services and wearables
Evercore increased its price target on Apple to $225 per share, for a whopping 78% opportunity. This may have been a key force pushing Apple shares higher by about 2% on Tuesday, March 16, even though the S&P 500 lacked traction through most of the trading session.
Unlike Deutsche Bank, the research firm did not dwell on the trendiest topics, namely the iPhone, Apple Car and retail stores. The bullish argument, in this case, was supported by the services and wearable segments – two top performers in fiscal 2020 that often fly under many Apple investors’ radars.
Evercore sees “a clear path to $100 billion in services revenue by fiscal 2025 and $70 billion for wearables. The growth should help drive margin expansion and help smooth out the cyclical nature of the hardware business”. For comparison, the iPhone brought in nearly $140 billion in revenues last year.
The analyst did not forget to discuss untapped growth areas, however. According to him, initiatives like the Apple Car, mixed reality devices and healthcare could generate 20% of Apple’s total future earnings. If true, this would be a massive bottom-line growth opportunity that is likely overlooked today.
The $5 trillion opportunity
Lastly, Wedbush weighed in on the Apple Car once again. According to the research firm, Apple could announce an auto-making partner by the summer. Potential candidates include Volkswagen (although the German company seems to be carving out its own path) and Hyundai.
Regardless of which direction the Cupertino company goes, Wedbush sees an enormous opportunity in electric and autonomous vehicles. About $5 trillion in revenues could be produced in the next decade, with EVs accounting for only 3% of the global market for cars today.
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)